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Claiming the Sec 179 deduction after termination of lease and purchasing the vehicle

A client leases a truck over 6000 pounds for 3 years (FMV $40000) and claimed actual expenses for the entire lease period at 100% business use When the lease terminated on 1/1/2011 he purchased the truck for $25000 and continued to use it 100% for his business. Can he now claim that he owns the truck and placed it in service on 1/1/2011 and take the Sec 179 deduction. Since the 179 deduction limitation for trucks over 6000 pounds is $25000, can he expense the entire cost of the truck on his 2011 tax return. His business income before subtracting the sec 179 deduction would be $35000.

Reply to
W Janusz
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No. He has prior use of the asset and a deduction linked to that use. That disqualifies it as "new" property. He still gets regular depreciation based on $25k starting 2011. If he had bought a different truck, the answer would be different.

Reply to
D. Stussy

Section 179 applies only to new assets. When the client took title to the truck, it wasn't new.

Reply to
Bill Brown

I think you're thinking of Sec 168(k) assets, which for bonus depreciation purposes, must be purchasd new.

If you purchase a used depreciable item, Sec 179 would usually apply.

The thing here is you're purchasing property already used and deducted in your business.

Reply to
Arthur Kamlet

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